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  • Electric Cars Slide Over for New Gas-Powered Cars

    No matter how hard the government tries, it just won’t ever be as effective as the free market is in satisfying consumer demand. Want proof? Take a look at what the federal government is doing to lure people into buying more expensive, less convenient plug-in electric cars.

    Since little demand currently exists in the market for electric cars, the government offers a tax credit of $7,500 to those who purchase vehicles like the Chevy Volt and the Nissan Leaf.  And even with the tax credit, electric cars aren’t flying off the lots. So while the government continues to waste taxpayer dollars in its attempt to commercialize an industry, the free market is meeting consumers’ needs by improving existing technology and doing so without government-funded incentives.

    Unlike the government, a few car manufacturers actually learned something from the spike in oil prices in 2008.  When gas prices soared, car dealerships watched SUV purchases plummet as consumers became far more interested in buying smaller, more fuel-efficient cars.  So how did the car producers learn from this lesson and respond to consumers’ wants?  The solution didn’t entail reinventing the wheel.  Instead, they found ways to revamp gas-powered cars – by developing existing technologies and resources – that use less gas and get more miles per gallon than hybrids.

    A recent article in The Washington Post offers a great example of how Ford, Hyundai and Chevrolet – manufacturers that are not receiving subsidies to produce new gas-powered cars – more effectively meet consumers’ needs than highly subsidized electric cars do.  As the article explains, “…the best immediate hope for restraining the nation’s fuel consumption might be some new vehicles that, although powered by conventional engines, run efficiently because they have been stripped of unnecessary weight, streamlined to move smoothly and equipped with gas-sipping engines.” The article continues to note that that some of these cars, like the Chevrolet Cruze “can reach eye-popping fuel economy levels of more than 50 miles per gallon on the highway…”

    Not only do these new “super fuel economy” cars use less gas, they also have a far lower sticker price in comparison to the electric cars currently on the market.  This really shouldn’t be a huge shock given the outrageously high cost of electric cars.  As Heritage’s David Kreutzer and Nick Loris explained in a recent paper on electric cars, despite any savings the electric car owner may receive because of not purchasing gas, over the long haul that savings is not enough to compensate for the higher sticker price – even when factoring in the generous tax credit.

    As Kreutzer and Loris also note, even with all the money the government has given to foster electric car growth, the market still is reluctant to respond.  If the idea is a good one and a company has the opportunity to profit from the product’s development, then no subsidy is needed to prompt investment.  The free market works just fine and succeeds where subsidies fail.

    Not only does this article demonstrate that the market works, it also implicitly demonstrates that government’s attempts to commercialize an industry by flooding it with handouts doesn’t.  A subsidy’s success is rarely – if ever – seen in marketplace, rather in most cases the only form of success subsidy recipients secure is dependence on the government’s dime.  And despite all this, some in Congress still haven’t learned the lesson.  Senator Debbie Stabenow (MI-D) and the Obama administration are seeking to change the existing $7,500 tax credit for electric vehicles into a rebate offered to consumers at the time of purchase.  Although this “Cash for Clunkers Part 2” has many problems, one of the worst ones is that this “rebate” benefits GM, which just so happens to be in Stabenow’s home state of Michigan.  This example demonstrates that when the government chooses winners and losers in the market, the winners are usually pet projects, and the losers are the taxpayers as well as the market.

    Posted in Energy [slideshow_deploy]

    29 Responses to Electric Cars Slide Over for New Gas-Powered Cars

    1. George Colgrove, VA says:

      My 2008 ford focus gave me 40 mpg from vt to dc. Exact! Just a simple 4 cylinder gas engine.

    2. Pingback: Electric Cars Slide Over for New Gas-Powered Cars | Big Propaganda

    3. Chad, Redmond WA says:

      I also wish the government was doing something other than offering tax credits for electric vehicles. But you are aware that EVERY type of vehicle fuel–hydrogen, gas, diesel, ethanol–gets some sort of subsidy from the government, right? This is a great argument against how the government works, but it's a lousy argument against electric cars.

      As for cost, compare the lease cost of a Leaf or Volt–after subtracting fuel savings–to a gas car. My Dad, one of the world's most frugal men, is in line to buy his first-ever new car: a Nissan Leaf, precisely because fueling and maintenance costs are so low that it will be cheaper in the long run than a gas car.

      The Chevy Cruze only gets 40mpg highway, if you get the Eco model.

      As for demand, the first year's production of the Leaf was sold out before it even became available. Volts disappear quickly and many are selling for over sticker, quite a feat in this market.

      Your claim about the inconvenience of low range show a misunderstanding of how the cars are used (hint: you don't run them out of fuel, and then fill them up, like you do with a gas car), but no matter. If you want range like a gas car, there are serial hybrids like the Chevy Volt, Fisker Karma, and Toyota Prius PHEV. Most of your driving uses electricity, but the gas engine is still there if you need to take a long trip in a car and don't have access to another one. So it doesn't make sense to complain about range in a BEV; if it doesn't work for a particular person, they will buy a PHEV instead and not have that problem.

      Even after accounting for the above-noted mistakes, I honestly don't understand the negativity in this article. My wife and I have driven electric cars for years, and they are smooth, quiet, have excellent throttle response, need no maintenance other than tires and wiper blades, are much cheaper and MORE convenient to fuel (I sure don't miss gas stations! having it full of electricity every morning is a great feeling), don't need oil changes or emissions inspections…even if they weren't helping the US economy by keeping our fuel spending local, and helping US energy security by not relying on OPEC nations, we'd still not want to go back to gas cars.

      If you want to write an article asking the government to do fewer subsidies, I'm OK with that. But you have nothing to gain by making false claims about electric cars. The US would be much better off with more of them.

    4. william , los angele says:

      I do appreciate your point of view.

      The other point of view is that America must move froward and away from its dependence on oil .. no matter who is producing it. Electric cars are an answer to this , together with their efficiency, being incredibly quiet, and if powered by solar, they are a wonderful answer to our dependency on anything except clean fuel….

      Unlike all gas powered cars, they are virtually maintenance free as they need no oil changes or periodic maintenance other than tires, brake pads and wipers.

      Electric cars are also 5 times as efficient as a gas powered car …. using $3 / 100 miles cost for an electric car compared to a gasoline powered car getting 25 mpg when gas costs $4- per gallon : 100 miles costs $16- (not including periodic maintenance costs)

      As Electric cars need to become mainstream for our urban centers where the most pollution is , an incentive / tax subsidy will assist to help the public buy these vehicles until enough are produced to bring down the cost of these cars

      Remember all the oil companies (and the companies that produce ethanol) receive significant subsidies from our federal government ….. the electric car subsidies are very small in comparison.

      In the end, everyone will be a winner ….. and the car companies will work to produce much more efficient gas powered vehicles using the new electric vehicle

      technology ….

    5. Paul Scott - Santa M says:

      I'm an EV owner and I advocate for plug-in cars. I also sell the Nissan LEAF in Santa Monica. Full disclosure…

      Your comments about letting the market do its magic are spot on. We in the EV world applaud you for this attitude. However, for some reason, there appears to be something missing from your equation. You say, ".. the free market is meeting consumers’ needs by improving existing technology and doing so without government-funded incentives."

      The "existing technology" is the internal combustion engine (ICE). The energy source for all of these is oil. Are you suggesting that oil is not subsidized?

      Let me throw some things out.

      A recent RAND study concluded the U.S. is spending each year about $75 billion for military costs to protect our access to oil.

      The Iraq war has cost us about a trillion and counting.

      The Afghanistan war about half that. Iraq is obvious, but if you are asking why Afghanistan, Osama bin Laden specifically stated that he attacked us on 9/11 because of our presence in Saudi Arabia. We're there for oil.

      The environmental costs of oil are evident. They include everything from the Gulf oil spill that costs thousands of jobs and poisoned a huge portion of the Gulf, to the thousands of Americans who get sick and die prematurely from the effects of air pollution from ICE. That's not even counting the whole climate change thing which I'll even leave off the table for argument's sake. The rest of the argument stays, however.

      The economic damage I've saved for last since it should hit you hardest. The billion dollars we spend each day for foreign oil costs our economy dearly. That is a full 45% of our foreign trade deficit. Further, the money we spend for gas leaves our local economies. At least 90% of what we spend for gas leaves our state. Here in CA, it's more than $50 billion each year. Consider what jobs could be generated if we kept that money circulating through our local economies instead of giving it to the oil companies. Consider how much wealth we could generate for millions of Americans if we instead kept that money and only spent 20% of it for kWh, and even that 20% stayed local.

      The concentration of our wealth in the hands of those people enables them to have inordinate power over our political system. Of course, you people at the Heritage Foundation love that since it's where your funding comes from. But make no mistake, your are not patriots for protecting them. You are quite the opposite.

    6. Alexandra Los Angele says:

      40 mpg in 2011 is nothing to be proud of. Even 60 mpg is not efficient enough to get us off our dependence upon oil. We can go to the moon but we still drive gas cars which are not much more efficient than 30 years ago!

      I have driven electric cars for several decades and I can attest that they are magnificent vehicles. When powered by rooftop solar or wind/geothermal/solar energy from a utility they are virtually pollution free.

      Driving more efficient gasoline cars is like smoking "lite" cigarettes. It is still bad for you, and you are still a smoker. It doesnt solve the problem, just puts off the day when you have to quit.

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    8. scratch, Los Angeles says:

      After a friend's son died in Iraq I found out how much the war is about oil. Our government spends billions every week and young men die to keep the oil flowing into our cars. Electricity is locally made and runs cleaner than oil even with dirty coal (clean coal is even better!)

      Electric cars used to be for nerds but US companies like Tesla and Fisker are kicking but on the the rest of the world. I think giving them loans (not grants) is a win win for our country and our sons.

    9. Paul Rinderle says:

      I had a 86 Honda LXI, fully loaded a stick shift (which now gets lower mpg than Auto) and got 37 mpg on trips.

      We went technologically backwards in 25 years of moving on.

      Where did the technology go??

    10. Bruce, Nebraska says:

      Gosh folks, lets forget about where that electric energy comes from. There are significant subsidies involved in the generation of solar power and wind power. There will be even more subsidies involved in creating the powerline infrastructure to support solar and wind power.

      Are there positive reductions in pollution for the cities? The increase of generation of energy needed to support those cars will have to, at the present time, come from coal, natural gas or nuclear generation. Are you sure you want to deal with the by-products of those methods of generation? Do you really want to chance a nuclear meltdown, re. Japan, near your cities?

      A great part of this nation, west of the Missouri river, is a sparsely populated region of few roads and few urban enclaves. I may live only 21 miles form my nearest town but it is only 7,000 population and does not have a great number of businesses. The nearest town of over 10,000 pop. is 70 miles away and the nearest town over 30,000 is 180 miles away. Electric cars are not a good idea here.

      A large portion of the nation's wheat, beef, lamb, and other food products is produced in that western part of the US. Folks, you might want to consider how your food supply is effected by the new technology you embrace.

    11. Paul Rinderle says:

      How about natural gas? I’ll someday buy a natural gas running car and fill it up in my carport.

    12. J. Marvin Campbell/C says:

      I have heard Jim Woolsey, former CIA director, say that the conversion of the U.S. transportation fleet to electric has become a matter of national security- and the U.S. military has already started converting their fleets to electric. Perhaps they know something we don't?

      Change always comes slowest from those whose very existence depends on maintaining the status quo. Even though their money controls our government, the fossil-fuel industry can't keep us in the 19th century forever.

      My family has driven electric vehicles charged with solar energy for the last ten years, and have no intention nor reason to ever go back.

      Electric certainly proved itself in MY marketplace, i.e., the one that matters most to me.

    13. Evi says:

      just think…if we had electric cars even 10 yrs ago, we wouldn't be harming the environment and dependent on oil and all that comes with it, duhhhh…forget the gas for god's sake!!!. the only reason gas powered cars are more "convenient" is because there are GAS stations!!! do you work for chevon???!!!

    14. Pingback: Use Solar In China » Blog Archive » Nissan electric vehicles LEAF delivered to first UK customers – REVE

    15. Jim says:

      I would think, like new products in the past, many people are waiting for the second or third generation of electric vehicles thinking as the past has shown there will be a marked improvement in the second or third generation of electric cars. I live in Texas and really would like to purchase an Aptera diesel electric but they are just not selling them anywhere outside of California. Actually I really do not think they are being sold at all as yet. To the futue then!


    16. George Colgrove VA says:

      J. Marvin Campbell,

      On a nice cold day in Winter, the feds will actually have a good excuse to take the day off. Thier cars wont start provided by us the taxpayer. Considering the a large portion of the federal workforce are out joy riding around DC, it may actually help out the traffic woes we have here.

      What is better than electric cars is making the feds stay at their desk an put in 8 hours. If they have to meet, try using teleconferencing via phone or video screens currently collecting dust, we have been buying for these goons. Heck go for buying cheap cams to put at each feds desk and make a version of skype for government use.

      The feds have too many cars as it is and they want to buy the far more expansive electric cars on our tab. This National Security issue probably has a lot more to do with GM not selling the Cruze, and suffering a massive loss.

    17. Karl, Montrose, PA says:

      I for one support new tech when logically applied. But, has anyone really run the numbers on these vehicles? Our nuclear power plants are dated, and based on the events in Japan, won't be expanding much less updated anytime soon. Coal is more expensive and less environmentally friendly than natural gas, which for some reason continues to fly under this Administration's radar. What is being done to expand the capacity of our electrical grid? Here in the NE, electricity is an expensive way to go, city or country, and recall we have had brown-outs in the summer-time throughout the country. Do we just park our electric cars in the heat of the summer? Like compressed natural gas vehicles, the time of the electric car will come, but it would be nice to know that someone is working on the total solution and not assuming someone else will pick up the slack on where the electricity comes from.

    18. Steve, Los Angeles says:

      Our government will need to sort out what to subsidize. The oil industry has shown very strong profits for the last decade or two and it seems silly to pay out incentives for electric vehicles just to compete with the various subsidies already provided to oil companies. We have supported oil for over one hundred years and they no longer need an annual government handout totaling much more than these limited-time EV rebates. The public should not be forced to subsidize a profitable (very very profitable) business. As a capital intensive start up industry, oil needed that first government-funded jump start to make gasoline vehicles competitive with the more popular electric cars of the time. That time is long passed. Many of the 240 million gas powered cars in this country could now easily be replaced with much more efficient electric models. (many, not all)

      I am surprised anyone advocating for a truly "free Market" would ignore a 4 billion dollar (by recent estimates) annual subsidy extended for decades.

      In contrast to broad generalizations often quoted, here are some accurate and current details: At $3 per gallon the average gasoline powered car will cost about 15 cents per mile. At $0.11 per kWh (as shown on your electric bill) the average pure electric vehicle will cost about 2 cents per mile. An Electric Vehicle costs less per mile. Every gas powered car I have owned has cost me about one thousand dollars per year for service once it was over two years old. My EV has cost about one thousand dollars total since it was built, in 1999. The EV will cost less to service. This could be an important issue for some car buyers.

      Are car buyers interested in a fully functional modern car that costs less to operate? Will car buyers appreciate the convenience of starting each day with a full charge? Will they enjoy a quiet, stable and pollution-free vehicle? I think so. The numbers seem to prove healthy unsatisfied demand when looking at the waiting lists of nearly 100,000 rather than misguided use of vehicles delivered.

      We will all benefit when production ramps up but until then it is up to early adopters and other support to allow the EV to become a sustainable business sector. Or take away the handicap of government funding for oil subsidies and realize that Electric Vehicles already make sense.

    19. Earl, CA says:

      @Bruce, Nebraska,

      While I don't live in NE myself, my parents are both from the western part of the state. They and I are all strong champions (and drivers) of EVs and I believe that NE is likely to be one of the biggest benefactors from electric transportation.

      First of all, rural Nebraskans need gasoline powered cars because they must travel long distances just to go shopping. Unfortunately, gas prices are going up fast and will continue to rise, thus severely impacting Nebraskans' ability to live. If urbanites on the coasts would quit wasting gasoline driving from their suburban homes, 30 miles each way to work, it would reduce the demand and hence lower prices of gasoline for those who actually do need fuel burning vehicles for the essentials in life. NE should support any efforts to reduce our country's gasoline use.

      The second benefit EVs would provide to NE is in the sustainable generation of electricity. While solar is a great source of energy for the southwestern deserts, the prairies of NE could be the Middle East of wind generation. The strong, regular winds that blow across NE carry a wealth of energy that we aren't going to run out of. Farm and Ranch owners can set up wind turbines that can potentially double the income off of their land since stock can still graze and grain can still grow even if there are wind turbines on the land (there have been windmills pumping water for years). Sustainability is something that runs deep in my family's values and Nebraska is a place where it can happen.

      I'm also not totally convinced that EVs won't work for Nebraskans either since driving distances aren't that long. Your 70 mile drive to the nearest major trading center is well within range of even a Nissan Leaf's 100 mile range if public charging (or RV parks) were located in the trading centers. I can definitely see the business case for major trading centers such as Alliance, North Platte, McCook, Hastings, Kearney, Norfolk, etc, offering fast charging stations for just that reason. Longer range and Plug-In Hybrids would have even less problem.

    20. Bobbie says:

      Well, good for you guys that love your electric cars. Hopefully you bought them by freedom of choice as it should be and not driven by some government money rebate giveaway!

      The inefficiencies and the trouble it will cost is not worth the whole country driving electric cars. I wonder how those batteries are manufactured without "government's claim of man made global warming?" Pollution free? Or where they're made?

    21. Paul Scott - Santa M says:

      Well, Bobble, you can wonder about those questions you pose, or you could make some effort to find out. It's really easy, just go to http://www.pluginamerica.org and read. All your questions will be answered.

      BTW, we did get our EV using government subsidies, just like those subsidies you use every time you fill up your tank with gas. The use of oil necessitates shipping hundred of billions of our dollars out of our country every year. It means we have to fight wars over oil and compete with China over the dwindling global supply. Staying with oil as our sole energy source is a recipe for disaster. If you are truly a patriot, you'll drive a car that uses 100% domestic energy.

    22. tom watty says:

      seems funnygas milage now is up to 40 mpg when just a few years ago auto industry told us it wasn,t possible ever hear of ceramic engines they are feasable and available run on water they will tell you there is no such things but it would put big auto industry out.

    23. Steve, Los Angeles says:

      Yes Bobbie, I did not need government incentives to stop paying thousands of dollars for gas. I eliminated the extra effort of maintaining a horribly inefficient and expensive gas engine for my transportation. I no longer waste my time or money at gas stations and expect more than a few other drivers may want to enjoy the same benefits. Perhaps not the whole country, but enough make a difference.

      I strongly object to the ongoing government handout to ensure the profit of an obscenely profitable oil industry.

    24. Martin says:

      40 years ago, My 65 Austin Healey got 42 miles to the gallon in the dead of winter on the Highway and 30 MPG in city Driving . My Buddy's Toyota 800 Sport Coupe got 52 miles to the gallon in City Driving. What have we forgotten or ignored over the years?

    25. Bobbie says:

      Paul- The use of oil necessitates shipping hundred of billions of our dollars out of our country every year? DUH!! Energy independence Paul. The world drills and you want to waste money on transforming cars and fuel to electricity? For special interests I'm certain. Electricity is needed in many areas essential to human lives. More essential than travel. Why would you want to add the potential of severe blackouts by choosing electrify (mfg without coal?) over the natural resource of oil? Remember electricity is used for essential purposes. And also keep in mind the human lifespan has increased significantly since the fear mongering started in regard of the false claim of "man-made global warming.." And no, I don't get government money (subsidies) for filling up my tank with gas. If you were patriotic, you wouldn't be a fool overlooking your freedom being taken away by government intervention. You'd know the difference between freedom and government.

      Thank you, Steve. I appreciate your sincere opinion.

    26. Pingback: President Obama Blames You for High Gas Prices | The Foundry: Conservative Policy News.

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    28. Rich, Michigan says:

      Actual cost of driving is what the free market understands. Oh, there will be a few who will 'stand' up and pay more to make a statement that they have a passion about. The bottom line is that the majority of the free market won't embrace 'green' until it's the cheaper alternative. If gasoline was $6 a gallon then no one would drive a big SUV for 'status' or just for looks. If gasoline was $8 a gallon then electric vehicles would look very enticing to many……and if gasoline was $10 a gallon then we couldn't make enough electric vehicles to satisfy demand. Just look at Europe…… Bicycling anyone??

    29. JaredCraft says:

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